Determine benefit cost ratio based on present wortth

Assignment Help Financial Management

Reference no: EM131603130

A refurbished heating system is being considered for a small office building. The system can be purchased and installed for $150,000, and it will save an estimated $40,000 per year in year-zero dollars that will increase with the general inflation rate of 3 % per year over a six-year period. The market value of the system will be $10,000 at the end of sax years and the market interest rate (i_) is 15% over this period. The company MARR is 12 % per year in its economic evaluations of refurbished systems. Determine the benefit cost (B-C) ratio based on present worth for this project.

Reference no: EM131603130

Questions Cloud

Determine benefit-cost ratio based on present worth : A refurbished heating system is being considered for a small office building. Determine the benefit-cost (B-C) ratio based on present worth for this project.

Building purchased three years now when inflation is conside : what is the present worth cost today of the $500,000 building purchased three years now when inflation is considered?

Building purchased three years now inflation is considered : what is the present worth cost today of the $900,000 building purchased three years now when inflation is considered?

What is that option worth : Now suppose that you have the option to place a bet, but that you don't have to bet until you know the result of the coin flip. What is that option worth?

Determine benefit cost ratio based on present wortth : A refurbished heating system is being considered for a small office building. Determine the benefit cost (B-C) ratio based on present worth for this project.

Why do think LLCs are expected to replace partnerships : Why do think LLCs are expected to replace partnerships, and close corporations and S corporations, but not publicly traded corporations?

Make the two investments equally attractive : Determine the percent change in the annual expenses for Alternative I that would make the two investments equally attractive.

Compare the after-tax equivalent uniform annual cost-euac : Compare the after-tax equivalent uniform annual cost, EUAC, of the defender (keeping the pumping station) to the challenger (sell station to the city).

Operating income-tax rates and business risk : Two operationally similar companies, Heavy and Light, have identical amounts of assets, operating income (EBIT), tax rates, and business risk.

User Account

All Pages